TMI Blog2023 (10) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... of the corporate debtor by not adopting a fair and transparent process. Furthermore, CRP has alleged that the RP had endorsed the resolution plan of Vama though it was not meeting the requirements under applicable law. From the facts of the case there are no doubt in mind that the CRP did not submit their EOI on time either in the first or second round of Form G. However as and when it was received the RP had apprised the CoC. Besides being non-serious and casual about complying with timelines stipulated in the IBC, even while submitting their EoI they had failed to adhere to mandatory requirements of RFRP. Even the EMD payment was made belatedly and that too for Rs. 2.25 crore as against requirement of Rs 2.5 crore. The CoC deliberated upon the matter and ultimately passed the resolution not to consider the non-compliant plan of CRP in the interests of the corporate debtor and this was communicated to CRP. There are no lapse or irregularity on the part of the RP or the CoC in not entertaining the belated and defective plan of CRP. The CoC has meticulously evaluated the matrix in approving the plan of Vama and the sole member of CoC having 100% voting share has already approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional sum of Rs. 25 lakhs for all the Government Department claims and undertaken to pay all the PF dues at actuals based on the outcome of an ongoing legal case at Delhi High Court with respect thereto. Thus, the approval of resolution plan of SRA-Vama by Adjudicating Authority, which was approved by the CoC with 100% vote share, does not suffer from any material or procedural infirmities. There are no illegality in either the first or second impugned order of the Adjudicating Authority which may warrant any interference in the exercise of appellate jurisdiction - there are no merit in any appeal - appeal dismissed. - Deputy Commissioner, UTGST, Daman Versus Shri Rajeev Dhingra, IRP of Radha Madhav Corporation Ltd., Committee of Creditors, Shri Mitesh Anil Kumar Agarwal, Shri Abhishek Agarwal, Income Tax Department, Shri Harish Vedkumar Anand, M/s Radha Madhav Corporation Crp Infrastructure Pvt. Ltd. Versus Rajeev Dhingra, Witworth Insolvency Professionals Pvt. Ltd. , Committee of Creditors, Shri Mitesh Anilkumar Agarwal, Shri Abhishek Agarwal, Income Tax Department, Vama Construction Co. Assistant Commissioner CGST Central Excise, Division-IV Daman Commissionerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent received 8 EoIs of which 4 PRAs were found eligible to participate in submission of Resolution Plan, last date for which was 12.04.2021. Post approval in 4th CoC meeting, RP sought extension of 90 days in the CIRP period which the Adjudicatory Authority allowed on 07.04.2021 extending the CIRP period upto 19.07.2021. The 5th CoC meeting held on 27.05.2021 sought exclusion of 99 days from the CIRP which the Adjudicating Authority allowed on 06.07.2021 thus allowing the CIRP to continue upto 26.10.2021. As the PRAs sought further time for submission of resolution plan, the CoC in the 6th meeting held on 20.08.2021 terminated the CIRP and authorized the RP to publish another Form G. The RP published fresh Form G on 22.08.2021 with last date for submission of EoI as 06.09.2021. The RP received 8 Eols out of which 7 PRAs were declared eligible. CRP Infrastructure Pvt Ltd ( CRP in short) submitted its EoI on 05.10.2021 which the RP refused to entertain as last date of submission was over. Extension for submission of Resolution Plans was allowed by the CoC till 26.10.2021 in the 8th CoC meeting held on 14.10.2021. Only one Resolution Plan was received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and for consideration of their claims in the resolution plan. CA(AT)(Ins.) No.1542 of 2022 has been filed by AC-CGST praying for setting aside the resolution plan of Vama and to consider their claims for payment of statutory dues to them. 3. At the outset, we propose to separately deal with the rival contentions made in each of the four appeals and thereafter focus on the issues which require our consideration. CA(AT)(Ins)1262/2022 4. Assailing the first impugned order, the Learned Counsel for the Appellant-CRP while making his submissions stated that though the CRP had requested the RP on 06.10.2021 to accept their EoI, the RP had declined their request stating that the time for submission of EoI was over. When this decision of the RP was challenged by the CRP, the Adjudicating Authority on 03.11.2021 allowed them to submit a resolution plan. The plan was submitted on 13.11.2021 but again not accepted by RP on 18.11.2021 on hyper-technical grounds making it clear that the intention of RP was to scuttle the resolution plan of CRP. By illegally excluding the plan of CRP from the purview of consideration of the CoC, it was contended that the RP has failed to elicit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has already been approved by the Adjudicating Authority can have no reasons to feel aggrieved. On the issue of related status of the SRA and the corporate debtor, it has been contended that CRP has failed to make any case of ineligibility of SRA under Section 29 A. Submitting further that the Adjudicating Authority does not have any jurisdiction to sit in appeal over the commercial wisdom of the CoC, reliance has been placed on the judgement in the matter of K. Shashidhar v. Indian Overseas Bank MANU/SC/0189/2019: (2019) 12 SCC 150 ( Shashidhar in short). 9. The Learned Counsel for the RP-Respondent No.1 echoing the views raised by Respondent No.2 also stated that the Adjudicating Authority has issued a well-reasoned order which does not warrant any interference. The CIRP of the Corporate Debtor has already culminated into a resolution plan by 100% majority of CoC and also approved by Adjudicating Authority. CA (AT) (Ins.) 1340/2022 and 1245/2022 10. Assailing the first and the second impugned order, the Learned Counsel for UTGST in these two appeals submitted that though the last date for filing claim for 25.11.2020, since Covid pandemic was prevailing at that ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o accept the claims. 14. It was emphatically asserted that once a Resolution Plan is approved by the Adjudicating Authority it shall be binding on the Corporate Debtor including government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force and other stakeholders involved in the Resolution Plan. Reliance was also placed on the judgement of the Hon'ble Supreme Court in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta (2020) 8 SCC 531 which has held that a successful resolution applicant cannot suddenly be faced with undecided claims after the Resolution Plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by the Resolution Applicant. CA (AT) (Ins.) No.1542 of 2022 15. It was submitted by the Learned Counsel for AC-CGST that in the present case, the AC-CGST had issued show cause notice on 26.02.2021 to the Corporate Debtor and RP was kept informed regarding issue of the show cause notice on 02.03.2021. Subsequently, the Joint Commissioner, CGST on 20.10.2021 had imposed a penalty of Rs.37.73 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law of prospective overruling, Rainbow (supra) is not applicable in the present matter. 20. We have duly considered the detailed arguments and submissions advanced by the Learned Counsel for the parties and perused the records carefully. 21. From the submissions made by the parties and the material available on record, the following two questions arise for consideration: - (i) whether any material irregularity been committed by the RP and the CoC in rejecting the resolution plan of the CRP or by the Adjudicating Authority in approving the resolution plan of SRA-Vama. (ii) whether on account of the rejection by RP of the claims filed by the UTGST and AC-CGST, the resolution plan of Vama, as approved by the Adjudicating Authority, does not meet the requirements under applicable law. 22. To answer the first question, we notice that it is the contention of CRP that the RP treated them unfairly and unjustly by not entertaining their resolution plan. Even after the Adjudicating Authority had allowed consideration of their plan by the RP, the RP had managed to persuade the CoC to not consider the resolution plan on its own merits by raising hyper-technical objections. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmities of this belated plan like non-submission of duly signed net worth certificate, audited financial statements, etc., and non-deposit of EMD. The relevant minutes of the 11th CoC meeting is reproduced below: - Though COC member was categorical and serious of the non-compliance of timeline of 'within seven days without fail' of the order of Hon'ble AA, as CRP was allowed to submit its Resolution Plan under the orders of Hon'ble AA, COC member suggested opening of the hard copy of Resolution Plan / discussion on the plan submitted. In the presence of representative of COC member, the plan was opened by the representative of IPE and during this opening of the plan, absence of Pen Drive, which too had to be submitted as per terms of RFRP, was noticed and taken note of. 27. Pursuant to the decision taken in the 11th CoC meeting, the RP informed CRP on 22.11.2021 that their resolution plan had been rejected by the CoC. However, as the CRP still insisted to remit the EMD amount on 04.12.2021, the RP brought this matter to the notice of the CoC in the 13th meeting held on 13.12.2021 and the relevant extracts of the said meeting are as reproduced below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder: - 31. On a careful consideration of the respective contentions advanced on either side, this Tribunal, keeping in mind of a vital fact that the Petitioner/Appellant', being an 'Unsuccessful Resolution Applicant', has no 'Locus', to 'assail' a 'Resolution Plan' or its implementation coupled with a candid fact that he is not a 'Stakeholder', as per Section 31 (1) of the I B Code, 2016, in relation to the Corporate Debtor', this Tribunal', without any 'haziness', holds that the Petitioner/Appellant', is not an 'Aggrieved Person', coming within the ambit of Section 61 (1) of the I B Code, 2016, especially, when he is not a 'Privy', to the Resolution Plan'. Viewed in that perspective, the 'Leave', sought for in IA No. 215 of 2023 in Comp. App (AT) (CH) (INS.) No. 58 of 2023, sans merits. 30. Coming to the first impugned order, we notice that the Adjudicating Authority in para 18 of the first impugned order had taken up the resolution plan of Vama for examination as envisaged by Section 30(2) of the IBC and after doing so held in para 23 of the impugned order that the reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan under Section 31 of the Code. Section 31 deals with approval of Resolution Plan. Section 31 (1) provides that if the Adjudicating Authority is satisfied that the Resolution Plan as approved by the CoC under Section 30(4) meets the requirements as referred to Section 30(2), it shall by order approve the resolution plan which shall be binding on the Corporate Debtor and other stakeholders involved in the Resolution Plan. As per the provision and procedure prescribed with regard to approval of Resolution Plan and the powers and functions of the CoC as outlined in the IBC, the CoC in the present matter held detailed deliberations on feasibility and viability of Resolution Plan of Vama. The Adjudicating Authority in turn on its part has clearly recorded in the first impugned order that on examination of the resolution plan of Vama it has found that no provision of law appears to have been contravened and that there is compliance to Regulations 38 and 39 of CIRP Regulations, 2016. It has also noted that interests of all stakeholders have been taken care of. CRP has failed to point out the contravention of any provision by the CoC in approving the plan. 33. We are of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto consideration all relevant facts and circumstances. The decision making of the CoC which is based on commercial wisdom is not amenable to judicial intervention as laid down by the Supreme Court. The IBC provides for an initiation of timely resolution of the corporate debtor and in the instant case the resolution plan having already been approved by the CoC and the Adjudicating Authority and implemented by the SRA, it cannot now be open to interference on an appeal preferred by an unsuccessful resolution applicant. It is equally significant to note that following the rejection of the plan of CRP by the CoC, CRP accepted the EMD refund and did not approach the Adjudicating Authority objecting to the resolution plan. It is, therefore, clear that CRP did not challenge the resolution plan before the Adjudicating Authority at the right point of time and raking up the matter belatedly. 36. Answering the first question, we therefore hold that no case has made by CRP to establish any procedural or material irregularity committed by the RP/CoC in rejecting their EoI and that the challenges raised by the CRP clearly fall within the domain of commercial wisdom of the CoC which is non-ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore ended on 24.02.2021. AC-GST and UTGST filed their respective claims on 02.11.2021 and 09.11.2021 which happen to be after the expiry of the extended 90 days period. The last date for submission for resolution plan was 26.10.2021. The resolution plan of Vama was approved on 20.12.2021 by the CoC in its 15th meeting. 41. Coming to the relevant regulations, Regulation 12 of the CIRP Regulations provides as follows: 12. Submission of proof of claim. (1) Subject to sub-regulation (2), a creditor shall submit claim with proof on or before the last date mentioned in the public announcement. (2) A creditor, who fails to submit claim with proof within the time stipulated in the public announcement, may submit the claim with proof to the interim resolution professional or the resolution professional, as the case may be, on or before the ninetieth day of the insolvency commencement date. (3) Where the creditor in sub-regulation (2) is a financial creditor under regulation 8, it shall be included in the committee from the date of admission of such claim: Provided that such inclusion shall not affect the validity of any decision taken by the committee prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there has occurred some material irregularity. In the instant case, the facts on record do not in any manner show that the RP was not diligent in performing his duty or acted in contravention of the of the IBC in rejecting the belated claims of UTGST and AC-CGST. 45. It is vehemently contended by the Learned Counsels for the RP and the SRA-Vama that when the Resolution Plan has already been approved by the CoC and it is pending before the Adjudicating Authority for approval, at this stage, if new claims are entertained the CIRP would be jeopardized and derailed. This would militate against the object of the IBC which is resolution of Corporate Debtor in time bound manner to maximize the value. 46. It was further added that the RP had categorically stated by email to UTGST that one of the reasons for rejecting their claims was attributable to the judgement of this Tribunal in the matter of Harish Polymer Product v. George Samuel Anr. in CA (AT) (Ins.) No. 420 of 2021 wherein it has been held that: .if at belated stage when the Resolution Applicants are already before the Committee of Creditors with their Resolution Plan(s) if new claims keep popping up and are ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en dismissed by the Adjudicating Authority vide second impugned order on the ground that the resolution plan having already been approved on 01.08.2022, prior to the Rainbow (supra), both applications have been rendered infructuous. 50. Assailing the second impugned order, it is contended by both UTGST and AC-CGST that Rainbow (supra) is applicable in the present facts of the case. It was also submitted that the resolution plan is totally silent regarding payment of dues of UTGST and AC-CGST which are both government departments and that the CoC cannot secure their own dues at the cost of statutory dues owed to any government or governmental authority. It has also been contended that assessment/adjudication proceedings of any company are not covered under the purview of moratorium imposed while in liquidation. 51. Advancing counter arguments, it is the contention of Vama that since Rainbow (supra) was passed on 06.09.2022, whereas the resolution plan in the present case was approved on 01.08.2022, in terms of the settled position of law of prospective overruling, the Rainbow judgment (supra) is not applicable in the present matter. Reliance has been placed on the judgement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Plan, which was approved by the CoC much prior to filing of the claim by the Appellant. (Emphasis supplied) 53. It is pertinent to add here that certain circulars issued by the GST Policy Wing of the Central Board of Indirect Taxes and Customs, Ministry of Finance, Government of India have been placed on record. One such relevant circular dated 23.03.2020 clearly provides that in accordance with provisions of IBC, institution and continuation of pending suits in proceedings against the corporate debtor is prohibited during CIRP and the same is reproduced below: CBEC-20/16/12 /2020 -GST New Delhi, dated the 23rd March, 2020 To, The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of Central Tax (All) The Principal Director Generals / Director Generals (All) Madam/Sir, Subject: Clarification in respect of issues under GST law for companies under Insolvency and Bankruptcy Code, 2016 - Reg. Various representations have been received from the trade and industry seeking clarification on issues being faced by entities covered under Insolvency and Bankruptcy Code, 2016 (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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